Money Management Benefits

There are a number of possible benefits that can be realized when kids are responsible for their own money management:

Kids can learn that money doesn’t grow on trees. They will quickly realize by themselves that they can’t have everything they want if they are put in the situation of managing their own money. Of course, a world with limits is a reality for nearly everyone on this planet. And a very important lesson to learn early in life.

Kids appreciate things more when they have to pay with their own hard earned money. Instead of receiving a new wardrobe from mom and dad for the new school year, a child will learn to value things more, and hopefully take care of personal items better, when she has purchased them with her own money. 

Parents no longer have to put up with the annoying money here and money there requests (e.g., nickel and diming the parent to death). If the child has budgeted for the new item, then he/she can purchase it as long as the item is preapproved by an adult. If there isn’t enough money saved to by the item, then the child shouldn’t get it. It really is as simple as that.

Since most kids will get the requested money anyway because most adults want the begging to stop, it is better to give kids an allowance or pay for odd jobs and chores so kids can learn to manage money on their own.

Money management can help parents communicate their own value system. For example, sharing money with charities that are important to adults such as a religious institution, the local food shelf or Toys for Tots.

It’s usually easier to mold behavior when kids are young. Money lessons started early usually stay with the child forever because there has been so much time to practice good money management that it becomes a habit.

Make children be smarter consumers. For example, how to evaluate cost versus perceived value, especially when it comes to name brand and designer items (usually more expensive than regular brands).

Gives kids self-confidence and can make them feel empowered and in charge of their financial futures. When kids get good at something important like money management, it really helps with their self-esteem. And it becomes a strength that the child can leverage for an entire life – personally and perhaps professionally.

Teach kids to be self-reliant and become financially independent. Adults can give a huge sigh of relief knowing they never have to worry about their kids when it comes to money. This is not true for a lot of parents whose children have become adults. A number of parents would like a “do over” when it comes to teaching their children good money management principles when they are young.

Turn kids into good financial decision makers and fiscally responsible individuals. These are the kind of kids that are planning for the future and spending their money wisely and responsibly. Not only is this good for the individual and family, it is really healthy for the countryas a whole.

References

1. Clark Smart Parents, Clark Smart Kids (Howard, 2005)

2. Kids and Money (Searls, 1996)

3. Money for Teens (Shelly, 2001)

4. Money Doesn’t Grow on Trees (Godfrey, 2006)

5. Raising Money Smart Kids (Bodnar, 2005)